Correlation Between Magna Mining and Prosper Gold
Can any of the company-specific risk be diversified away by investing in both Magna Mining and Prosper Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Magna Mining and Prosper Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna Mining and Prosper Gold Corp, you can compare the effects of market volatilities on Magna Mining and Prosper Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Magna Mining with a short position of Prosper Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna Mining and Prosper Gold.
Diversification Opportunities for Magna Mining and Prosper Gold
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Magna and Prosper is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Magna Mining and Prosper Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosper Gold Corp and Magna Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Magna Mining are associated (or correlated) with Prosper Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosper Gold Corp has no effect on the direction of Magna Mining i.e., Magna Mining and Prosper Gold go up and down completely randomly.
Pair Corralation between Magna Mining and Prosper Gold
Assuming the 90 days trading horizon Magna Mining is expected to generate 4.25 times less return on investment than Prosper Gold. But when comparing it to its historical volatility, Magna Mining is 1.37 times less risky than Prosper Gold. It trades about 0.1 of its potential returns per unit of risk. Prosper Gold Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Prosper Gold Corp on November 14, 2024 and sell it today you would earn a total of 4.00 from holding Prosper Gold Corp or generate 40.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Magna Mining vs. Prosper Gold Corp
Performance |
Timeline |
Magna Mining |
Prosper Gold Corp |
Magna Mining and Prosper Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Magna Mining and Prosper Gold
The main advantage of trading using opposite Magna Mining and Prosper Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Mining position performs unexpectedly, Prosper Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prosper Gold will offset losses from the drop in Prosper Gold's long position.Magna Mining vs. Brunswick Exploration | ||
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.
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